What Makes a High-Quality Carbon Offset?

What Makes a High-Quality Carbon Credit?

The central idea behind a carbon credit is that it can substitute for reductions that you, as a buyer, could have made to your own emissions. For this to be true, the world must be at least as well off when you use a carbon credit as it would have been if you had reduced your own emissions.[1] When people talk about the “quality” of a carbon credit, they are referring to the level of confidence one can have that the use of the credit will fulfil this basic principle.

This quality concept – frequently referred to as “environmental integrity” – sounds straightforward, but it is challenging to guarantee in practice.

A variety of terms are sometimes used to define quality criteria for carbon credits, including that avoided emissions or enhanced removals must be “real,” “quantifiable,” and “verifiable.” Most of these terms have their origin in regulatory criteria established for air pollutant credits under the U.S. Clean Air Act (going back to 1977). However, these terms have distinct regulatory meanings under U.S. law that do not always translate meaningfully to carbon credits. The term “real,” for example, has no commonly agreed definition across carbon credit programs and standards, and is often used as a vague catch-all.[2]

For this guide, therefore, we have distilled the essential elementsof carbon credit quality down to five criteria. In short, high-quality carbon credits are those associated with avoided emissions or enhanced removals that are:

  • Additional
  • Not overestimated
  • Permanent
  • Not claimed by another entity
  • Not associated with significant social or environmental harms

Crediting programs were created with the intention of ensuring the quality of carbon credits. In this section of the website, we describe the approaches crediting programs use to address the quality criteria listed above. As indicated in Common Criticisms, however, many observers believe that crediting programs have a mixed track record. Part of the challenge is that carbon credit quality is not black and white. The multiple criteria involved – plus the fact that critical criteria like “additionality” are a matter of confidence rather than absolute truth (see below) – means that quality exists along a continuum.

Crediting programs, by contrast, are forced to make a binary decision: do they issue carbon credits or not? Most carbon crediting programs will say that every credit they issue is equally valid, but buyers should feel justified in questioning this assertion. Think of scoring the quality of a carbon credit on a 100-point scale. A crediting program may decide to issue credits to every project that exceeds a score of 50. But as a buyer, is a score of 51 really “good enough”?[3]

Astute buyers will understand this difficulty and actively seek out higher quality carbon credits. For each quality criterion below, we highlight some questions that buyers can ask about specific crediting projects to better ascertain their relative quality. Even for sophisticated buyers, however, getting detailed answers to these questions may be difficult. Thus, in Strategies for Avoiding Lower-Quality Credits, we identify a range of strategies buyers can use to steer clear of lower quality carbon credits and improve the chances of acquiring higher-quality credits.

Related pages:

Additionality
Avoiding Overestimation
Permanence
Exclusive Claim to Avoided or Removed GHG Emissions
Avoiding Social and Environmental Harms

[1] This condition applies to GHG emissions, as well as to other social and environmental impacts. If global GHG emissions would be no greater as a result of using a carbon credit instead of reducing your own emissions, then the credit is said to preserve “environmental integrity” (Schneider and La Hoz Theuer 2019). However, it is also important that crediting projects do not cause significant social or (non-climate) environmental harms. Both are important for carbon credit quality.

[2] See Gillenwater (2012).

[3] For an in-depth discussion of these ideas, see Trexler (2019).